Financial Results Presentation Materials for the Fiscal Year Ended - - PowerPoint PPT Presentation

Financial Results Presentation Materials

for the Fiscal Year Ended March 2016 (FY3/2016)

May 10, 2016 BOOKOFF CORPORATION LIMITED

TSE First Section: 3313

• 1. FY3/2016 Financial Results Overview

P2

• 2. Progress with Renovation

P12

• 3. Policies for FY3/2017

P39

• 4. APPENDIX

P61

1

Contents

The plans, strategies, and financial forecasts presented in these materials contain forward-looking statements not based

• n historical fact. Forward-looking statements are based on management judgments using information available at the
• time. Actual results may vary significantly from forecasts due to changes in the business environment and other factors.

Note Concerning Forward-Looking Statements

(Contact) Corporate Planning Department, BOOKOFF CORPORATION LIMITED

2

• 1. FY3/2016 Financial Results Overview

3

Net sales

¥75.6 billion (+3.0% YoY)

Operating income

• ¥530 million (-)

Ordinary income

¥5 million (-99.7% YoY)

Profit attributable to

• wners of parent
• ¥520 million (-)

Financial Overview

BOOKOFF Reinvention Story

4

Store gross profits

• n existing products

Expenses

Before the initiative

Store gross profits

• n existing products

Expenses

After the initiative

Higher personnel expenses and advertising expenditures

YAHUOKU! gross profits on existing products Gross profits on home appliances

Purchasing used home appliances ↓ Incremental sales of home appliances Submitting store merchandise to YAHUOKU! ↓ Faster turnover rate ↓ Incremental sales of existing products

• Building a structure to secure inventory, net sales, and gross profits in excess of

the cost of investment by supplying merchandise to YAHUOKU! and starting to deal in reuse home appliances

Profits Profits

Thinking on FY3/2016 Action

5

• Purchasing is the source of the reuse business profits. For FY3/2016 we plan to

work on staffing and systems, based on which we will actively invest in promotions to increase our purchasing base and so drive up profit levels.

More staff, better systems will boost purchasing

Aggressive promotions Purchases growth Net sales growth Operating income growth

Profit pyramid*

Staffing Training

QSC (Quality, Service, Cleanliness) motto Promotions and advertising

Purchases Net sales

Profits

Profits

* Internal BOOKOFF diagram illustrating steps to securing store profitability

Current Situation

6

• Progress with reinvention, effects of benefits from supplying merchandise to

YAHUOKU! emerging. Home appliances on the way to growth.

[Averages for small to medium-sized BOOKOFF existing stores]

Insufficient expansion in sales and gross profits due to lack of growth in purchasing home appliances.

6

(Thousand yen)

• Mar. 2015
• Mar. 2016

Net sales

8,300 9,000

Purchase amount

3,500 3,700

Gross profit

5,200 5,500

Store costs

Variable expenses

150 250

Part-time staff cost

1,600 1,800

Fixed expenses

2,750 2,800

Store profits

700 650

Headquarters sales support costs

100 300

Operating income

600 350

Significant increase in personnel and systems expenses and other store costs to promote progress with strategy Emerging contributions to net sales of and gross profits on existing products from supplying merchandise to YAHUOKU! Large increase in head office costs from creation and development of

• perating structure and

investment in advertising and sales promotion activities, etc.

Unable to cover increase in costs,

• perating income decreased

(1) (2) (3) (4) (1) (2) (3) (4)

Operating Income vs. Plan

7

Initial plan

500

• 470
• 1,030

Reuse Store Business

• 530

90

• 70
• 160
• 230
• 120
• 180

170

• 210
• 30

Store- YAHUOKU! sales system Cost for reuse home appliances Effect of warm winter

• n apparel

merchandise

Lower income in the FC business

• ¥20 million

Discrepancies in cost estimates

• ¥100 million

Effect of supplying books to BOOKOFF ONLINE

(180)

Increase in workforce Aggressive investments for reuse home appliances, store-YAHUOKU! sales system and other new measures March 2016 Key causes of difference

• n single month basis

Online sales (including YAHUOKU!) from supplying books that have been on display in stores for more than a certain period to BOOKOFF Online

BOOKOFF Online Business HUGALL Business Others

Results

Monthly sales plan shortfall

(Million yen)

8

Reuse Store Business

• Existing-store sales vs. FY3/2015:

Up 4.2%

• New stores

BOOKOFF SUPER BAZAAR, BOOKOFF PLUS: 4 Repackaging from BOOKOFF to BOOKOFF PLUS: 1

• Supplying store inventory to YAHUOKU! (directly operated stores and some

franchised stores)

• Introducing reuse home appliances (directly operated stores and some

franchised stores (with some exceptions))

• Increasing staff numbers to further introduction of new measures
• Positively implementing promotions to support home appliances and

mobile phone purchases Financial Overview by Segment

9

• Expanded stores (21,000 m2 to 35,000 m2) to accommodate more merchandise
• Commencing program of consolidating store book inventory
• Initiating joint sales of BOOKOFF Online merchandise with YAHUOKU!

・Opened “One-Stop Purchasing Consultation Desk” at Nihombashi Mitsukoshi Department Store ・Greatly increasing inventory stocking purchases by centering on affluent customers as our main target ・Big decrease in sales following the sale of the TSUTAYA business in the previous fiscal year

BOOKOFF Online Business HUGALL Business Packaged Media Business

Financial Overview by Segment

10

74,347 1,516

• 830

New stores Closing of stores BOOKOFF Online Business HUGALL Business

(Million yen)

Others

FY3/15 FY3/16 +2,217 2,092 2,348 733 32 513

• 4,188

76,564

Existing stores Conversion of FC stores to directly

• perated stores

Sale of TSUTAYA Business

YoY Change in Net Sales

YoY Change in Operating Income

11

520

(Million yen)

FY3/16 FY3/15 1,127

• 1,289
• 234
• 61

451

• 38

100

• 224
• 32
• 530
• 850

Higher existing- store sales Increase in workforce Costs for new measures Provision for card points New stores BOOKOFF Online Business HUGALL Business Sale of TSUTAYA Business Corporate expenses Others

Start-up costs

• 255

Promotion costs

• 398

Effect of supplying inventory to BOOKOFF Online

• 197
• 1,657

12

• 2. Progress with Reinvention

(Progress with the Group’s Medium-Term Business Plan)

Environment Recognition

13

¥1.6 trillion ¥2 trillion

2009 2014 2025

Source: The Reuse Business Journal "Second-Hand Business Data Book 2016"

Annual growth

4% to 5%

• The reuse market has grown for five consecutive years; ¥1.6 trillion currently.

Forecast to reach ¥2 trillion.

Our Vision

14

• People with experience of having utilized reuse still only account for around

40% of the population

• To accomplish our mission of becoming BOOKOFF for people who don't let

things go to waste, we are dedicated to creating a world where everyone has easy access to reuse items in order to achieve 100% reuse utilization

40% 100%

Source: Used Article and other Reuse Promotion Business Research Council 2012 Report

Reuse utilization Current Target population

15

Maximum purchasing

– Leveraging the comprehensive power of the BOOKOFF Group –

Maximum sales

– Maximizing sales efficiency in stores and

• ver the Internet –

Medium-Term Business Plan – Two Basic Policies

Maximum Purchasing

16

Maximizing purchasing options so that customers can sell when and where they want to sell

On the go

Comprehensive reuse stores  BOOKOFF SUPER BAZAAR  BOOKOFF PLUS

HUGALL In-store purchasing consultation desk HUGALL “ReUse Smart at anytime” shop type

At home

Takuhonbin, home pick- up purchasing service HUGALL Home pick-up purchases BOOKOFF Dispatch purchasing service HUGALL “ReUse Smart at anytime” condominium type

If selling books  BOOKOFF

Maximum Sales

17

Integrated Group store network and online to optimize range of products and customer convenience offered, with service tailored to suit our customers’ varied lifestyles

Online

BOOKOFF Online E-commerce website All group companies opening stores on YAHUOKU! auction website

×

Store

BOOKOFF SUPER BAZAAR 33 stores BOOKOFF PLUS 43 stores BOOKOFF 758 stores

*Number of stores as of March 31, 2016.

YAHUOKU! Auction Store

Power to Drive towards the Realization of the World We are Aiming for

18

Number one in real reuse Number one in online reuse

 Group’s abundant inventory supplied to YAHUOKU!  Developing services that link together store services renewal and online operations  Expanding inventory and boosting purchasing by growing the range of items covered  Coordination in IT technology to promote supplying items to YAHUOKU! and the development of new services  Promotions to exploit existing member base  Referring customers who have used Yahoo services

YAHUOKU!

Toward the Future

19

Consolidated operating income

By FY3/2020

¥4 billion

Future target

¥10 billion

20

Reinvent BOOKOFF

– From BOOKOFF for books to BOOKOFF for all reuse items –

Expand our comprehensive reuse stores

– Create large and multi-format reuse stores for an overwhelming competitive advantage –

Grow our BOOKOFF Online Business

– Offer the largest possible book selection and expand into other product categories –

Increase the scope of operations and revenues in the HUGALL Business

– Advance from the business model launch to growth and profitability –

Medium-Term Business Plan – Four Key Strategies

Reinvent BOOKOFF –Renewal cycle–

21

Higher store sales and gross profits (reduced losses) More customers (store visits, purchases) Inventory turnover

(empty shelves restocked)

More purchases Staff motivation (employment, raises) Room for new merchandise categories Higher quality for existing products (Wider channel for purchases) Sell merchandise via online listings

Start off by handling reuse home appliances

YAHUOKU!

Net sales Net sales Net sales

Reinvent BOOKOFF –Sales composition–

22

• Renewal of both sales areas and product categories to diversify BOOKOFF’s

sources of income

Books Software Only at stores Books Software

Home appliances

New products Stores Product categories Sales areas

 Pre-renewal  Post renewal

YAHUOKU!

Reinvent BOOKOFF –Freshening up of sales areas–

23

• Introduction into directly operated stores and some franchised stores of

developed store-YAHUOKU! sales system

• Construction of environments in which BOOKOFF products can be bought anytime

anywhere nationwide - with a particular concentration on soft media

YAHUOKU!

Reinvent BOOKOFF –Freshening up of sales areas–

24

• Supplying 900,000 store goods items, mainly soft media, by end April 2016

* Currently also supplying 950,000 books via BOOKOFF Online (described later)

Trend in number of items supplied to YAHUOKU!

Company V Company P Company D 20 40 60 80 100

1,000,000 800,000 600,000 400,000 200,000

900,000 items

April 2015

April 2016

Auction Store

Reinvent BOOKOFF –Rethinking product categories–

25

• Introducing reuse home appliances to directly operated reuse stores
• In addition to building price database reflecting market values, we have also

created a dealing manual for use in assessment and processing

On-site training conducted by specialist team members Remote assessments using web cameras Head office’s specialist staff monitor price movements, selling environments and markets nationwide and set purchasing prices accordingly. Staff at stores use the home appliances specialized purchasing system to assess suitable prices.

Head office Individual stores

26

Reinvent BOOKOFF –Rethinking product categories–

• BOOKOFF’s strengths are its number of stores and their locations
• Having a neighborhood BOOKOFF in which customers can sell anything they want

represents a huge step forward for home appliances

BOOKOFF 246 Kawasaki Kajigaya Store BOOKOFF Fukuoka Hakata Exit Store

Starting off by handling reuse home appliances

Expand Our Comprehensive Reuse Stores –Store opening plan–

27

• Opening of nine new stores that will become comprehensive reuse stores at the

heart of each of the areas located

• Also undertaking some renewal of existing BSB and BOP stores

■New store openings

(directly operated) BSB: 1 BOP: 3 ■Repackaging stores (from BOOKOFF to BOP) Directly operated store: 1 Franchise store: 4

35 43 32 33 67 76

210

BOP BSB

Comprehensive Reuse Stores Store-opening Plan (Directly operated stores + Franchise stores)

• Mar. 31, 2015
• Mar. 31, 2020

Plan

BSB: BOOKOFF SUPER BAZAAR BOP: BOOKOFF PLUS

• Mar. 31, 2016

(Number of stores)

Expand Our Comprehensive Reuse Stores –FY3/2016 openings–

28

BSB Route 14 Chiba Makuhari Floor space: 2,500 m2 BOP Nagoya Shin-Nakashima Frante Floor space: 1,700 m2 BOP Don Quijote Akita Floor space: 1,400 m2 BOP Tatomi Showa Street Store Floor space: 1,500 m2

Manuals for each product category

Expand Our Comprehensive Reuse Stores –Purchasing operations –

29

• Preparing manuals for each product category, and on-site training for shop floor staff
• Deploying members of staff with specialist skills to undertake assessments using web

cameras, and thereby constructing a purchasing operation that means we can provide a reassuring and credible purchasing service

Expand Our Comprehensive Reuse Stores

30

• In addition to providing a combination of large store selling power from outlets that

function as core facilities in their regions with the convenience offered by a small neighborhood shop, we also aim to become the number one in reuse option in every area by making the best use of our soft skills resources in terms of specialization and customer interaction

Number one in reuse in the region

Grow Our BOOKOFF Online Business

31

• Undertaking the expansion of the floor space of our logistics warehouses so as to

be able to greatly expand the number of inventory items

• In addition to our existing Takuhonbin dispatch service, we are commencing book

inventory shipments from our reuse stores

Expanded warehouse space from 21,000 m2 to 35,000 m2 Customers Stores

As of end-March 2015 About 1.6 million copies

As of end-March 2016 About 4.0 million copies

→

Inventory transfer

Takuhonbin

→

As of end-March 2017 (plan) 7.5 million copies

Book Inventory

32

• In addition to sales on our BOOKOFF Online proprietary e-commerce website, we

began supplying books to YAHUOKU! from January 2016 and we currently provide more than 950,000 titles.

950,000 titles supplied

Customers

Grow Our BOOKOFF Online Business

YAHUOKU!

33

Largest and best range of reuse items stocked

• We aim to realize the largest range of used book inventory in the sector and have built

a site that makes it easy for our customers to search for and find the items they want.

• We are also examining the prospect of dealing in new product categories both to meet
• ur customers’ needs and to make best use of the Group’s existing store services and

an affinity with books and software.

Website improvement New services New product categories

 Upgraded search functions  Enhanced product information  Storefront reception and store

• rders

 Coordinated membership services  High affinity products  Responsiveness to user needs

Grow Our BOOKOFF Online Business

34

• With our stock of used book inventory as our starting point we aim to achieve

sustainable growth by accepting the challenge of expanding into new product categories

2 4 6 8 10 12 FY3/16

FY3/20 FY3/17

Expanding into new product categories by enhancing opportunities to use our website and by capturing new sales Maximizing the number of used book inventory carried and boosting our sales efficiency through cooperation with YAHUOKU!

Net sales

¥10 billion

(Billion yen) The challenge of expanding into new product categories Growth in sales centering on used books and software

Grow Our BOOKOFF Online Business

35

Increase the Scope of Operations and Revenues in the HUGALL Business

Launched HUGALL in April 2013 as a reuse business that purchases items through all types of channels (not just in-store); sells items via the best channel

Purchases Sales

Optimize channels Add value to merchandise Parcel delivery service At customers’ homes Purchasing agent stores B-to-B A variety of channels for purchasing “ALL BUY” Sell at the highest prices Internet BOOKOFF Group stores B-to-B Overseas

Increase the Scope of Operations and Revenues in the HUGALL Business

36

• Expanding our purchasing services by using various different channels
• Opened One-Stop Purchasing Consultation Desk at Nihombashi Mitsukoshi Department

Store in June 2015

• Opened the shop-type “ReUse Smart at anytime” automated lockers mainly at

commercial facilities in Tokyo Metro area

• Purchasing amounts growing strongly particularly in our main target zone of

affluent customers

Exceeded ¥90 million

• Sep. 2015
• Approx. ¥20 million
• Apr. 2015
• Approx. ¥50 million
• Mar. 2016

Monthly Purchases

37 FY3/15 FY3/17 FY3/14 FY3/16 FY3/18 FY3/19

Sales Purchases

Business expansion Moving into the black  contributing to earnings Concentrate on establishing a business model

Move to 16,000 ㎡ warehouse

Increase the Scope of Operations and Revenues in the HUGALL Business

Earnings

38

Purchases

• In response to continued expansion in purchasing, the aim now is to achieve

conversion into sales, rightsize our cost base, and achieve profitability

Sales Expenses

Increase the Scope of Operations and Revenues in the HUGALL Business

39

• 3. Policies for FY3/2017

Policies for FY3/2017 – Positioning

40

By implementing the following measures, we aim to certainly achieve our aims of returning to the black at the operating level and making progress towards recording ¥4 billion of operating income

 Realization of contributions from investments in reinvent (new measures) made in the previous fiscal year  Strict implementation of cost control  Continued action to be taken in accordance with medium-term business plan

Policies for FY3/2017 –Key points for individual businesses

41

Reinvent BOOKOFF Expand our comprehensive reuse stores Grow our BOOKOFF Online Business Increase the scope of

• perations and revenues

in the HUGALL Business Making reinvent actions well established; turning profitable

 Expansion in purchasing reuse home appliances; growth in sales  Improvement in earnings by means of cost control

New store openings; acceleration of comprehensive repackaging program

 Eight new BSB, BOP stores to be opened  Ten BOOKOFF stores to be repackaged

Increasing earnings by maximizing the number of used book inventory items carried

 Enhancing internal operational efficiency of warehouses by use

• f materials handling techniques

 Website improvements and implementation of book log review

Achieving return to the black by means of expansion in scale of business operations

 Doubling in purchases through expansion in procurement channels  Enhancement of sales efficiency by means of the use of multiple sales channels

Reinvent BOOKOFF –Targets we have being aiming at this year

42

Amount of purchases

Existing product categories Existing product categories Existing product categories

Home appliances

Existing product categories Home appliances

Up 20% YoY

April 2015 results 2016年4月

Workforce growth YAHUOKU! listings Reuse home appliances Strengthened promotions

As well as adding 20% on our existing store purchases with newly introduced reuse home appliances, we have also realized incremental sales and gross profit by supplying items to YAHUOKU!

April 2016 initial plan

Amount of sales Amount of purchases Amount of sales

Key to the Success of the Renewal

43

(Thousand yen)

• Mar. 2016

Target Net sales

9,000 10,000

Purchase amount

3,700 4,200

Gross profit

5,500 6,000

Store costs

Variable expenses

250 300

Part-time staff cost

1,800 1,800

Fixed expenses

2,800 2,800

Store profits

650 1,100

Depends on whether, and to what extent, it will be possible to create target model stores

[Averages for small to medium-sized BOOKOFF existing stores]

44

Situation as of April 2016 (Implementation action)

• The plan adopted in the previous fiscal year (the initial plan) was to secure a 20% year-on-year

increase in the amount of purchase, and to maintain our policy of raising recognition of our dealing in home appliances from the fourth quarter of the previous fiscal year.

• This was achieved not just by advertising and publicity but by rolling out a store campaign

incorporating higher purchase prices and granting additional points, etc.

Recognition enhancements on corporate website

April 2016 inventory value plan and product category breakdown (20% higher YoY for existing stores)

Home appliances Existing product categories

Higher purchase prices for home appliances campaign TV commercial

45

Situation as of April 2016 (Purchase) –By package–

Existing product categories Existing product categories Home appliances Existing product categories Home appliances

April 2015 Results April 2016

Initial plan

April 2016

Results

Up 20% YoY Up 13% YoY

Existing product categories Existing product categories Home appliances Existing product categories Home appliances

Up 23% YoY Up 25% YoY

• We took various actions, but purchases of reuse home appliances fell far short of plan.

Purchases related to BOOKOFF failed to achieve 20% year-on-year growth. BOOKOFF BSB/BOP

Amount of purchases by product category

April 2015 Results April 2016

Initial plan

April 2016

Results

Situation as of April 2016 (Sales) –BOOKOFF–

46 Existing product categories Home appliances Existing product categories Home appliances

• In contrast to a year-on-year growth of 13% in purchases, sales by 6% year-on-year.

It will take time for the increased purchase to translate into sales. Initial plan Results

Existing product categories Home appliances Existing product categories Home appliances

Initial plan Results

Up 13% YoY Up 6% YoY

Amount of sales

BOOKOFF

Amount of purchases

Situation as of April 2016 (Sales) –BSB/BOP–

47 Existing product categories Home appliances Existing product categories Home appliances

• Although BSB and BOP achieved their planned aim for growth in purchases year-on-year, as

was the case for BOOKOFF, it will take time for the increased purchase to translate into sales. Initial plan Results

Existing product categories Home appliances Existing product categories Home appliances

Up 25% YoY Up 3% YoY

Amount of purchases Amount of sales

BSB/BOP Initial plan Results

48

Situation as of April 2016 (Trends)

• Differences were apparent between BOOKOFF, BSB, and BOP
• Although there were some stores in which the increase in purchases translated into sales

growth, such cases remain rare as yet Purchases vs. FY3/15 Sales vs. FY3/15 BOOKOFF BSB/BOP

Purchases up Sales remain flat

33%

Purchases up Sales up

24%

Purchases remain flat Sales remain flat

33%

Purchases remain flat Sales up

10%

Purchases up Sales remain flat

59%

Purchases up Sales up

15%

Purchases remain flat Sales remain flat

24%

Purchases remain flat Sales up

2%

Distribution of numbers of stores by purchases/actual sales results

Purchases vs. FY3/15 Sales vs. FY3/15

Summary of Current Situation and Outlook for the Reuse Store Business in FY3/2017

49

 Purchases of reuse home appliances fell far short of plan but there are stores where the increase in purchase was linked to growth in sales and so although we are not making any change to our strategic policy direction on growth in purchase and sales, given the current situation and prospects, we acknowledge that the process will take a certain amount of time  Having considered the situation as of April 2016 in making our forecasts for the current fiscal year we have extensively revised our assumptions for the year and will be implementing cost controls in response  Since there is a wide degree of disparity between individual stores in terms

• f purchase and sales, we are adopting a change of direction in our policy

so as to further the implementation of actions tailored to the circumstances of individual stores and plan to improve profitability by achieving the aims of our medium-term business plan as a result

50

FY3/2017 Measures for Strengthening Reuse Home Appliances (Store actions)

• Current state of purchase and sales by individual store and development of individual

actions tailored to the levels established in the revised forecasts for annual purchases and sales Purchases vs. FY3/15 Sales vs. FY3/15 [Satisfactory progress]

Maintaining purchase levels and maintaining sales levels

[Issues outstanding]

Maintaining purchase levels and measures to bolster sales

[Issues outstanding] Cost control [Issues outstanding]

Bolstering purchase levels

• r

cost control

[Sales]

 Polishing up the sales area  Assiduously updating prices  Strengthening YAHUOKU! sales

[Purchases]

 Enhancing home appliance

• ffers to existing product

customers  Improving customer service (converting them into regular customers)  Taking particular care with in- store notices

[Cost control]

 Revising content of range of product categories handled  Right-sizing allocation of personnel

51

 Implementation of area marketing

Selecting areas of concentration from consideration of current state of purchases, and planning to maximize the sales efficiency achievable by concentrating costs in these areas

 Launching promotions synchronized with peak timings for specific product categories

Staging timely promotions that are synchronized with the timing of replacement purchase periods and new product launches, etc.

 Taking every care with in-store promotions

Reinforcing the effectiveness of in-store promotions with POP, in-store broadcasting and other techniques to ensure 100% levels of recognition among existing customers of the fact that the store now handles home appliance items. Planning for utilization switching.

 Strengthening online ability to attract customers

• Boosting exposure of home appliances featured on corporate website and freshening up

contents regularly

• Taking measures to increase the recognition and visibility of the range of home appliances

carried from pages on YAHUOKU! website and BOOKOFF auction store

FY3/2017 Measures for Strengthening Reuse Home Appliances (Promotions)

FY3/2017 Full-year Forecasts

52

• In light of the April results, we have significantly revised our consolidated
• perating income target of ¥3 billion, and set full-year forecasts for our

business results which we believe are highly likely to be achieved

Net sales

¥85,000 million

(+¥84,300 million YoY)

Operating income

¥800 million

(+¥1,330 million YoY)

Ordinary income

¥1,300 million

(+¥1,290 million YoY)

Profit attributable to owners of parent

¥350 million

(+¥870 million YoY)

FY3/2017 Assumptions for Reuse Store Business Results Forecast

53

Existing-store purchase growth

Up 5％ YoY

Existing-store sales growth

Up 5％ YoY

Cost control We would revise our cost forecasts for personnel expenses, advertising and promotional expenses, and other measures etc.

FY3/2017 Sales Plan by Product Category in the Reuse Store Business

54

Product category FY3/16 results FY3/17 plan FY3/17 sales composition

Books 100.7% 100% 35% Software (music, videos, games) 103.6% 100% 29% Fashion goods 100.5% 104% 14% Trading cards, hobby goods 122.3% 114% 4% High-end brand items, other 106.8% 112% 11% Home appliances/mobile phones

• Significant

increase

7% YoY sales by product category (Reuse Store Business existing store sales)

• Sales results for existing products saw all areas, including apparel which was

heavily affected by the warm winter, maintaining levels of turnover above those recorded in the previous year

• The plan for the current fiscal year has been created at levels which appear

highly achievable in consideration of the most recent business results and trends

Initial plan Current revision Differences Main factors

Reuse Store Business

5,150 3,000

• 2,150
• ¥1 billion for 200 small to medium-sized

BOOKOFF stores

• ¥1 billion for 100 BSB and BOP stores requiring

remodeling so as to be able to achieve the increase in earnings planned

BOOKOFF Online Business

200 500 +300

Business results better than at the time the initial forecast was made

HUGALL Business

• 100
• 100

Issues remain in achieving profitability

Packaged Media Business, Other

• 100
• 100
• Corporate expenses

and adjustments

• 2,250
• 2,500
• 250

Effect of dual corporate tax system (liability)

Total

3,000 800

• 2,200

(Million yen)

Gap Between Initial Plan (operating income ¥3 billion plan) and Current Revision

55

FY3/2017 Net Sales Forecast (vs. FY3/2016)

56

76,564 2,963 2,429

FY3/17

FY3/16 +8,436 39 1,407 85,000

Closing of stores (FY3/16, FY3/17)

2,584

• 988

Existing Stores New stores / stores acquired (FY3/16, FY3/17)

Reuse Store Business

+4,560

BOOKOFF Online Business HUGALL Business Other

(Million yen)

FY3/2017 Operating Income Forecast (vs. FY3/2016)

57

• 530

800

• 90

1,200

• 70

200 370

• 240
• 40

Existing stores BOOKOFF Online Business HUGALL Business Corporate expenses Other

+1,330 FY3/16 FY3/17 Reuse Store Business

+1,040

Effect of dual corporate tax system, etc. Significant increase due to introduction of reuse home appliances and store-YAHUOKU! sales system, etc. Closing of stores (FY3/16/FY3/17) New stores / stores acquired (FY3/16, FY3/17)

(Million yen)

58

・Existing-store sales vs. FY3/2016: Up 5% ・New stores

BOOKOFF SUPER BAZAAR, BOOKOFF PLUS: 6 stores Repackaging from BOOKOFF to BOOKOFF PLUS: 9 stores

・Completion of introduction of reuse home appliances and supply of products to YAHUOKU! at directly operated stores ・Enhanced efficiency in purchasing and transfer of inventory due to integration of logistics structure

Reuse Store Business

FY3/2017 Assumptions for Results Forecast

・Net sales vs. FY3/2016: Up 250% ・Expansion in scale and promotion of new developments in existing purchasing channels ・Bolstering of special events sales at commercial facilities in addition to EC sales, and B-to-B sales

59

BOOKOFF Online Business

・Net sales vs. FY3/2016: Up 25% ・Increase in EC inventory due to the expansion of warehouse floor space to accommodate a larger inventory ・Website improvements resulting from strengthening in recruitment of engineers and more effective exploitation of customer data ・Enhanced operational efficiency in warehouses due to investments in fully automated packaging machinery, etc. ・Prevention of opportunity losses as a result of expansion in new book inventory carried

HUGALL Business

FY3/2017 Assumptions for Results Forecast

Goals for Completion of the Medium-term Plan

60

FY3/20

Operating income

¥0.8 billion

FY3/2X

Operating income

¥10 billion

Operating income

¥4 billion

FY3/17

61

Appendix

About BOOKOFF

Name BOOKOFF CORPORATION LIMITED Representative Nobuyuki Matsushita, President and CEO Established August 1991 Head office 2-14-20 Kobuchi, Minami-ku, Sagamihara, Kanagawa, Japan Capital ¥3,652 million Business activities Operation of BOOKOFF used book stores, development and operation of new reuse merchandise stores, support for franchised stores Group companies 12 subsidiaries, 1 affiliated company Stores 869 (including 480 FC stores) Employees 1,156 Stock listing First Section, Tokyo Stock Exchange (Securities code: 3313) Trading unit 100 shares

Corporate Profile Corporate Philosophy Mission

As of the end of March 2016

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“BOOKOFF is for people who don’t let things go to waste”

A company with an infrastructure for people who refuse to discard items that can be reused

Key Performance Indicators/Dividend Policy

Key performance indicators

Operating income of ¥10 billion (long- term target) and operating income of ¥4 billion for FY3/2020 (medium-term target)

Dividend policy

Target 25% payout ratio based on consolidated net income

Contributions to society through our business activities Pursuit of employees’ material and spiritual wellbeing

About the BOOKOFF Group

63 The BOOKOFF Group is a company with an infrastructure for people who refuse to discard items that can be reused In the hope that our customers and that everyone in the local area will feel that “it's great that we've got this store here,” and so that every employee in our company can take pride in feeling that “I'm glad I work in this and that I work for this company,” the BOOKOFF Group has adopted the following two corporate philosophies.

Contributing to society through our business activities Pursuit of employees’ material and spiritual wellbeing

Corporate philosophy

Strengths of the BOOKOFF Group

Approximately 900 real stores nationwide

It's been 25 years now since our foundation. The group as a whole has grown into a store chain of approximately 900 stores both in Japan and overseas.

High level of recognition among consumers

Recognition of the BOOKOFF Group among consumers is approximately 100%. We are widely known as being “the place where you can sell things.”

Reassuring brand power

By providing a purchasing service in which we put ourselves in our customers’ shoes, and fully observe and respect all laws and regulations governing our business, we aim to create stores where our customers can sell things with complete peace of mind.

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From BOOKOFF for Books to BOOKOFF for All Reuse Items: 1

Store package of the BOOKOFF Group

BOOKOFF handles books, CDs, DVDs, game software, home appliances, mobile phones, and

• ther items.

BOOKOFF has approximately 750 stores nationwide. BOOKOFF PLUS is a composite store/store complex chain that

• ffers an extra ‘plus factor’ and

deals in apparel, brand goods, and similar items. It has now developed into a chain with 43 stores across Japan. BOOKOFF SUPER BAZAAR is a comprehensive large-format store chain that deals in broad range of reuse items. It has now developed into a chain with 33 stores nationwide.

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Providing a place to experience “the fun of reusing.”

From BOOKOFF for Books to BOOKOFF for All Reuse Items: 2

Home appliances, mobile phones Books Apparel Luxury-brand bags, kitchenware Sporting goods, musical instrument Children’s apparel, baby goods

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Understand “the fun of reusing” and you can enjoy life even more!

A chance to find a new interest or hobby! Try choosing a writer you've never read before! Read the whole of a comic book series in one go! Be bold and take the challenge of wearing a new color or style you never worn before! The fun of coordinating! The fun of being able to buy without worrying about the price! You can see all the things you can't see anywhere else all gathered together here in one place! Choose brand goods for everyday use! The fun of collecting brands! Go on, this is your chance to pursue nostalgic sports or to grab a musical instrument you've always wanted! The blossoming of your children's talents The surfing and golf goods, the guitar you’ve wanted for so long… perhaps you can't afford it new but you can get it for reuse at a very reasonable price, and you can make a start right now without worrying if you just remember that “if I don't keep it up I can always sell it.” You've seen snowboarding, tennis, and golf genius boys and girls on TV, haven't you? It might be tough to buy a full set all in one go, but if it's reuse you can give your child the support to pursue the challenge of a new talent without having to worry about the cost. Baby goods - they soon grow out of them which is all the more reason to get them for reuse! Children grow so quickly, and the baby carriage you bought for them so lovingly soon falls out of use. At times like these, please buy your items reuse and carefree, and then just sell them again when you’ve finished with them. Nowadays, for home appliance items, the functionality of reuse is completely satisfactory! If you set out to buy all of your important home appliances in

• ne go, it's going to amount to a very expensive bill for you to
• pay. These days however, you can easily buy great quality

reuse products with high-level functions and excellent reliability so cheaply! Unused brand tableware at very affordable prices! The prices are so reasonable so why not get the whole set?!

From BOOKOFF for Books to BOOKOFF for All Reuse Items: 3

• Q1. Did you know that BOOKOFF has started

dealing in home appliances? 67

Thanks to the impact of TV commercials and other promotional activities, the level of recognition for this new range of products among consumers has risen and we are receiving a strongly positive response from our customers in the main.

Degrees of Recognition and Satisfaction for the New Home Appliance Product Category Level of recognition

Have actually bought something Have actually sold something Know that they are dealing in these items Didn't know that they are dealing in these items

Level of recognition 60% +

• Q2. Please say how satisfied you feel about BOOKOFF

dealing in home appliances?

Level of satisfaction

Very satisfied Satisfied Can't really say one way or the other Dissatisfied

Just under 60%

• f customers

surveyed expressed satisfaction. 0% were totally dissatisfied.

Customer survey conducted in February 2016 at stores Q1: N=604 people

BOOKOFF Group’s CSR Activities

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We are continuing to provide “it's BOOKOFF so it can be done” support.

2016 Kumamoto Earthquake Reconstruction Assistance

If you sell books, CDs, DVDs, game software, and other items that you don't need at home on the Takuhonbin home pick-up purchase service provided by BOOKOFF Online, then the amounts of those purchases can be useful in providing support for disaster relief thanks to the “selling support program” that we are operating. Furthermore, the BOOKOFF Group will add an extra 10% on top of the purchase amount which will be donated to the Japanese Red Cross Society.

Great East Japan Earthquake Reconstruction Assistance

Please apply on the BOOKOFF Online homepage.